Ace fund manager Samir Arora has taken to social media to clarify a common misconception in currency arithmetic — how to correctly calculate depreciation of the Indian Rupee (INR) versus appreciation of the US Dollar (USD).
Arora, the founder and fund manager at Helios Capital, highlighted that while most headlines often state that the dollar has appreciated by a certain percentage against the rupee, it does not mean the rupee has depreciated by the exact same percentage. The difference arises because of how currency values are quoted and how depreciation is measured.
To illustrate, he used the example of the rupee moving from USD 1 = ₹61 to USD 1 = ₹88. At first glance, this looks like the dollar has appreciated by about 44%. However, that does not mean the rupee has depreciated by 44%. In fact, the rupee has depreciated by only 30.6% during this period.
Arora broke it down with a simpler example:
Rupee Vs Dollar
If the rupee weakens from ₹50 per dollar to ₹100 per dollar, the dollar’s value appears to have doubled — an appreciation of 100%.
But for someone holding ₹100, the calculation looks different. Earlier, ₹100 would fetch $2, while now it fetches only $1. That means the rupee’s purchasing power in dollar terms has halved — a 50% depreciation, not 100%.
This way of looking at it, Arora stressed, provides a clearer perspective for investors and ordinary citizens. While the optics of “USD appreciating by 100%” may seem alarming, the actual impact on rupee holders is different and must be correctly calculated.
The clarification is important because currency moves are often at the center of market narratives, trade flows, and inflation expectations. A precise understanding of how depreciation is measured can help investors make better financial decisions and avoid exaggerated interpretations.
In essence, Arora’s point underlines that INR depreciation should be calculated from the perspective of how much fewer dollars one can buy with the same rupee amount, rather than simply mirroring the USD appreciation percentage.
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